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What's better for the housing market: someone who buys a $10 million home for themselves, or someone who buys 10, $1 million dollar apartments and rents them ou
by Aunche 5y ago
What's better for the housing market: someone who buys a $10 million home for themselves, or someone who buys 10, $1 million dollar apartments and rents them out? If anything, the former should be paying a higher property tax because they're constraining the supply buyer and renter markets.
>Basically, Georgism tax policy - https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism.
Yes, I largely agree with Georgism, but I don't think incentivizing rich people to buy the largest home possible is within the spirit of Georgism. You'd also run into the problem of people pretending their apartment complex is really just a large mansion. They'd likely spend money on renovations that make the units less desirable to make it classify as a single home.
>What benefits do you see REITs provide to a community, beyond increasing your personal wealth?
What benefit does my landlord provide that a REIT doesn't? REITs allow me to be invested in real estate without exposing me to too much risk associated with a single location.
>Also, a hard cap of, say, 10 homes without increase would still allow REITs to exist depending on implementation.
No REIT can exist with 10 homes. That's way too much money proportionally spent on administrating it.
- tomrod 5y agoI don't think the pocketbooks of REIT owners justify keeping the status quo housing market. Commercial and industrial REITs can do fine with 10 properties. Residential REITs perhaps shouldn't exist, as residences typically aren't directly economically productive. Business and investment models can adjust; management companies would fill the investment gap for REITs. So rather than direct ownership, shareholders can instead invest in publicly traded property management firms -- arguably what a REIT should do anyhow. With fewer units, landlords have more incentive to keep properties in working order to keep up liquidity should they choose to sell. This helps offset the tax incentive to let properties go to ruin. I don't follow your assertion that increasing taxes on larger ownerships would result in rich people buying the biggest property they could possibly afford. People do that anyway?
- Aunche 5y ago>Residential REITs perhaps shouldn't exist, as residences typically aren't directly economically productive. Residential REITs and other institutional investors finance the construction of new apartment complexes. I don't think a landlord is that much more incentivized to take care of their property any more than a property manager who gets hired by the REIT or institution. Even if small landlords are better than REITs, I don't think that people who own 2-10 homes are necessarily any more productive landowners than institutional investors. There are plenty of people in the former category besides landlords: for example, someone buys a seasonal home that does nothing for most of the year or inherited property and are just letting it sit vacant. >I don't follow your assertion that increasing taxes on larger ownerships would result in rich people buying the biggest property they could possibly afford. People do that anyway? The point is to disincentivize this behavior? Same reason why you would increase property taxes/LVT in the first place. I'm not saying that institutional investing in property is great. I'm saying that there are worse behaviors that should also be punished. This is a particularly big problem in vacation destinations where the housing supply gets swallowed by non-residents.